The drilling business began turning around in the second quarter and oil executives are changing their tune about their prospects as crude prices rise, a new Dallas Fed survey shows.
FuelFix.com reports the Federal Reserve Bank of Dallas’ gauge of energy business activity climbed out of the red and into the black in the second quarter, signifying some drillers are trying to grow after a two-year oil bust that bankrupted scores of energy companies. More than half of the 152 surveyed oil producers and equipment suppliers believe crude prices will end up higher than $55 a barrel by the end of this year. As of this afternoon, crude was trading for about $49.50 per barrel.
“Oil prices are right on the cusp” of reaching profitable levels for the average U.S. driller, says Michael Plante, a senior research economist at the Dallas Fed. Companies say their oil fields break even from $50 to $62 a barrel. “There are a bunch of guys saying things have stabilized, which is definitely an improvement from the first quarter.”
If prices hold up, many plan to keep expanding this year and in 2017, the energy executives told the Dallas Fed in a survey released Wednesday. The anonymous survey is the central bank branch’s new tool to collect information from usually tight-lipped oil companies.
“Higher prices have at least lifted the mood of many in the industry, and people are starting to drill again, it seems,” one executive says.
FuelFix.com has the full story.
